Summary

• The S&P/TSX Cannabis Index is currently down 48 per cent year-to-date.
• However, pot stocks like Aurora Cannabis and Aphria continue to see high trading volumes amid the pandemic.
• Aurora Cannabis saw a drop in its net revenue of C$ 72.1 million in its latest financial quarter.

Cannabis stocks have been a favorite among Canadian investors through the coronavirus pandemic. A recent Statistics Canada report showed record high retail sales of adult-use cannabis, securing a new level of C$ 232 million in July. However, the S&P/TSX Cannabis Index currently posts decline of 48.65 per cent year-to-date (YTD) and of 24.45 cent quarter-to-date decline. Health Canada has also hinted at the possibility of the Canadian recreational cannabis market flattening. Despite this, the popularity of pot stocks like Aurora Cannabis (TSX:ACB) and Aphria Inc (TSX:APHA) remains strong among investors.

Aurora Cannabis is among the most traded stocks on the Toronto Stock Exchange (TSX), while Aphria stocks continue to inch closer to its pre-pandemic levels. Let’s take a close look at these two pot stocks to understand their latest performance.

Aurora Cannabis (TSX:ACB)
Current Share Price – C$ 6.39

Aurora Cannabis made headlines last week (September 22) after it released its fiscal fourth quarter report. Around the same time, new CEO Miguel Martin announced that Aurora Canabis has lost its top spot in the Canadian consumer market.

ACB STOCK PERFORMANCE

Currently, Aurora Cannabis is ranked high among the most actively traded stocks on the TSX. It recorded a 10-day average trading volume of 3.2 million.

Aurora Cannabis stock saw a growth of over 1672 per cent since debuting on the TSX in 2014. During the ‘Green Rush of 2018’, when the Canadian the cannabis market was on a surge, its shares hit a record level of C$ 164.52. But as the cannabis market declined, so did Aurora Cannabis shares.

There was a dip in its stock price last week after it posted its Q4 2020 results. Its scrips currently show a decline of nearly 81 per cent year-to-date (YTD) and down about 65 per cent in the last six months.

ACB FINANCIAL RESULTS

The Edmonton-based company saw a net revenue of C$ 72.1 million in its fiscal fourth quarter ending 30 June 2020. This was a drop of about five per cent quarter-over-quarter (QoQ). Its cannabis net revenue, amounting to C$ 67.5 million recorded a three per cent QoQ decrease, while its medical cannabis net revenue of C$ 32.2 million was down four per cent QoQ. The company’s adjusted EBITDA was C$ 34.6 million in Q4 2020, as compared to over C$ 50 million in Q3 2020. Aurora Cannabis expects to achieve a positive adjusted EBITDA in Q2 2021.

Aurora Cannabis also posted many balance sheet adjustments in Q4 2020. Its fixed asset impairment charges stood at C$ 86.5 million, along with inventory impairment worth C$ 135 million and a non-cash goodwill write-down of C$ 1.6 billion. The company reported a one-time fee of US$ 30 million that it will pay to mixed martial arts business Ultimate Fighting Championship (UFC) in Q1 2021 for terminating their contract.

This pot firm raised gross proceeds of US$ 36.6 million from an at-the-market (ATM) equity program after its fourth fiscal quarter.

Aphria Inc (TSX:APHA)
Current Share Price: C$ 5.94

Canadian pot company Aphria Inc got its license to produce cannabis in Canada in 2014. While most companies suffered operational disruptions and failed to generate revenues amid the pandemic, Aphria posted a revenue growth for the fifth consecutive quarter in its financial results ending 31 May 2020.

Aphria’s market cap stands at C$ 1.7 billion at the moment. Its current price-to-book (P/B) ratio is 0.94, its price-to-cash flow (P/CF) ratio stands at 2,681.6 and its debt-to-earnings (D/E) ratio is 0.23, as per the data on the TSX.

APHA STOCK PERFORMANCE

Shares of Aphria Inc have steadily recovered since its March lows. After falling as low as C$ 3.03 during the pandemic-triggered market crash in March, its stock price rebounded 91 per cent in six months’ time.

Aphria stocks recorded 14 per cent YTD decline. However, it continues to secure a substantial trading volume. In the last ten days, it saw an average trading volume of 1.3 million.

APHA FINANCIAL RESULTS

Aphria Inc posted an 18 per cent YoY rise with a net revenue of C$ 152 million in its fourth quarter fiscal ending 31 May 2020. Its adjusted EBITDA amounted to C$ 8.6 million in Q4 FY20, up 49 per cent QoQ.

The Leamington-based company also saw a net loss of C$ 98.8 million in Q4 FY20, as compared to a net income of C$ 15.8 million in Q4 FY19. By the end of latest quarter, it had cash and cash equivalents of about C$ 497 million.

The stock rode high on the trend of the cannabis trend of 2018, when Canada legalized marijuana, and have recorded a growth of 270 per cent since its debut at the TSX in 2012.